Sales Pipeline Tutorial: How to Build a Sales Pipeline

Sales Pipeline Tutorial: This is an ultimate guide of Sales Pipeline concepts, including templates, importance, metrics, etc.

This article includes the various topics related to the sales pipeline. Here you will get to know the meaning of the sales pipeline along with its importance and templates. The various stages of the pipeline are also explained here.

It also illustrates how one can build a sales pipeline along with some pro tips. Various sales pipeline metrics are explained in simple terms.

We have briefly explained the difference between a sales pipeline and a sales funnel in a tabular format. The meaning of the sales pipeline, its importance, the ways to manage the pipeline, FAQs and some mistakes to be avoided are also explained.

Let’s begin!

What is a Sales Pipeline

A sales pipeline is defined as a visual representation of the journey of prospects in the sales process that goes through various stages, from lead generation to closing the lead.

Different organisations have different sales stages as per the nature of their business. Generally, it includes 5-12 stages. Some common stages are Cold Leads, Sales Emails, Qualified or Unqualified Leads, Sales Calls, Proposals Sent, and Closed Leads.

With the help of the sales pipeline, the managers can come to know the stage of any prospect, their conversion rate, the place they are lacking behind, track team performance, or can use it for forecasting how much they are going to get as revenue.

The sales pipeline is very crucial for the business. This cannot be taken for granted as it shows you the performance of sales representatives at each stage of sales and you can improve anything that is hindering your way to achieve your target. It shows you a clear picture of lead status, as more leads do not mean profit.

HubSpot (Recommended Sales Pipeline Management Tool)

HubSpot is a powerful sales software that organizations, both small and large, can rely on to considerably optimize their sales pipeline. This is a tool sales teams can use to connect with leads appropriately via landing pages, emails, forms, etc. Another highlight of HubSpot is the centralized dashboard it offers.

This dashboard lets users manage their contact and conversations in one place. HubSpot also excels, thanks to the AI backing its functioning. The software can be used to automate several processes associated with sales, marketing, and CRM processes. Finally, HubSpot offers advanced reporting tools to measure the success of your campaigns.

Features:

• Contact Management
• Deal Pipeline
• Reporting Dashboard
• Live Chat
• Online Form Builder

Sales Pipeline Template

Examples are as follows:

1. Kanban Pipeline: It is the most common form of the pipeline where the pipeline is created horizontally. Under this, each lead has its card containing its details, like contact information and deal terms.
2. Deal size pipeline: This form of pipeline provides snapshots containing information about the deal size of each opportunity.
3. Pipeline table: Under this, all the prospects are shown in a table with their respective data and all opportunities with a sort feature wherein you can sort the table concerning a pipeline stage, deal size, and so on. This is good for a holistic view of different factors.
4. Multiple pipelines: This is used to track different business units and lead types in complex businesses like B2B.

Importance of Sales Pipeline

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• Shows the status of Sales Representatives: A sales pipeline helps in managing sales representatives by getting to know how far they have reached to attain their target. It helps in managing and controlling their actions.
• Shows the value of success at each stage: As it contains various stages, you can evaluate the quality of each contract in each stage of the sales process.
• Forecast sales accurately: It helps in knowing how much revenue you are going to achieve. It shows the possibility of several deals being closed or loose in the future. It enables you to evaluate the process and adjust the marketing strategies.
• Report on financial metrics: It enables the users to get to know about various metrics like several deals close to the final stage, rate of successful deals or lost deals, amount of time taken on each lead, and so on. So for any organization, financial metrics are very crucial to decide the future action.
• Monitors sales team’s action: It evaluates the team’s actions and identifies their weak and strong points. This helps them in improving the points of their weaknesses.
• Make benchmarks to be used further: It shows virtually the cycle of the sales process. It shows when the sales are at rising or moderate or low. So with the help of this, you can set trends and further use them as benchmarks to be attained in the future.
• Stimulate Resource Allocation: This will enable you to allocate the right leads to the right sales representative. As it shows various metrics, including the number of leads successfully closed by salespersons, you can assign the most challenging or complicated leads to the highest reached salesperson having better skills.
• Increases Productivity: As the sales pipeline shows different metrics, including the nature of leads, progress at each stage, etc., facilitates you to put effort into more important leads and aspects rather than wasting time on dead leads or no worth aspects.
• Increases Revenue Growth: This helps in increasing the revenue growth of the business with the help of various data-based metrics. It shows you the exact points where you are lacking behind and need to improve or need to put more effort into, which ultimately leads to growth of revenue.
• Nurture Leads: With the data available at each level of the sales pipeline about the leads, it gets easier for the sales representatives to interact with them as per their nature and interests and provide them with better counseling with effective communication.

Sales Pipeline Stages

Stages of the pipeline are defined as the steps involved in getting the leads and converting them into customers. Different industries or organizations have different stages in the sales pipeline depending on the business.

So here are the common stages that most businesses follow:

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Stage 1 – Lead Generation: This is the first stage of the sales pipeline where leads are acquired or generated in various ways.

With the use of the Search Engine Optimisation strategy, more and more traffic can be acquired on the website by using AdWords or letting the interested leads submit web forms on various platforms like social media pages, company websites, and so on.

Stage 2 – Lead Qualification: Now, in this stage, the leads that have been generated through various means are put together and analyzed. It determines the degree of interest of leads through lead scoring techniques that involve factors like emails opened, webpage visits, interest in scheduling appointments, and more. It quantifies the quality of leads by assigning scores.

Stage 3 – Initiate contact: Now qualified leads are being communicated to know their needs and requirements. In this interaction, you have to mold your services to match their needs. Here, sales representatives can initiate contacting them by phone or by email or can set up a drip campaign to auto send emails based on their behaviors.

Stage 4 – Schedule meeting: After initiating contact with the leads, a meeting is scheduled to give a presentation or demo or to demonstrate the product or service as per their availability or convenience. After giving a presentation, the results could be a closed deal, a lost deal, the proposal required, or more information that needs to be provided.

Stage 5 – Negotiation: At this stage, negotiation is done between the lead and the sales representative on prices, services, conditions, etc. Sometimes it may take longer to settle with the conditions as it includes many aspects and multiple parties. To make it a smooth process, you need to even include the lead, finance, legal department, and other parties involved on the same page.

Stage 6 – Closing the deal: After the negotiation, here comes the stage of closing the lead and mark as a lost deal or a winning deal or nurture as sometimes the buyer is not ready to buy yet. For some businesses in the closing stage, some contracts are to sign or onboarding items to be addressed or invoices to be sent for payment. After this, the sales representative passes this lead to the accounts or service manager.

How to Build a Sales Pipeline

Certain factors should be considered before building an appropriate sales pipeline for an organization.

They are as follows:

• List of Prospects: The first thing needed is a list of qualified leads that showed interest in your product or that fit your Ideal Customer Profile. They should be listed with different details, like their names, contact information, and so on.
• Sales Process: A definite structured sales process is needed so that the team knows how to close the leads step by step. If you have a sales process, it would be easier for you to build a sales pipeline.
• Revenue Targets: You need to analyze and set your revenue targets. Put your efforts into getting that number. Having a set target will help you in adding enough leads to the sales pipeline.
• Team Members: You need to ask the opinions of your team members who would use the sales pipeline to make it more effective. This will help in better communication, collaboration, and pipeline management.

There are certain steps that you should follow to build an effective sales pipeline. Different types of organizations need different steps in the sales process so as in the sales pipeline.

Some common and general steps are described below:

Step 1 – Identify the list of leads: The first and foremost thing that you should do is to jot down the names of prospects you have with their required information collected from different platforms like website forms, SEO strategies, and so on.

Step 2 – Define the stages: Now you need to define the stages of your sales process. There are generally six stages, i.e.,

1. Lead Generation
2. Lead qualifications
3. Initiate contact
4. Schedule meeting
5. Negotiation
6. Close deal

Different organizations may have different sets of stages depending on the complexity of products or services. The more complex your product is, the more stages there will be.

Step 3 – Define sales cycle length: Sales cycle length is the period from acquiring the leads to closing them into a win or lose deal. It is affected by various factors like the complexity of your product, customization it requires, or the source of leads.

For example, outbound leads take more time in converting than inbound leads. So, to control the sales cycle length, you need to think about product delivery, lead sources, and sales engagement.

Step 4 – Decide ideal pipeline size: Now you need to decide the ideal pipeline size. Here you need to decide the number of leads you need to take so that your revenue target can be attained. You should take more leads than your target because many of them would not turn up to be a winning deal. If your target is to close 20 deals a week, then you should take 40 leads.

Step 5 – Create a sales process around this data: Now, based on the identified list, defined stages, sales cycle length, and ideal pipeline size, you need to create a sales process around the data obtained. By creating a sales process based on researched numbers, the sales representatives are more likely to win opportunities with a proven framework.

Step 6 – Maintain the health of the pipeline: Keep maintaining the health of your sales pipeline by establishing standard follow-ups, monitoring sales metrics, and removing stagnant deals from the pipeline. Constant follow-ups allow sales representatives to maintain a clean pipeline. Keep track of sales metrics like average deal value, average win rate, or conversion rate.

Metrics

1. Several deals in the pipeline: It means the number of qualified leads in the pipeline. Qualified leads fit the Ideal Customer Profile or showed any interest in the product or service. So, with these metrics, you can see how many leads are going to be processed at any given point in time.
2. Average deal value: It refers to the sum of the value of all won deals. Every lead is worth some amount. It gets changed at the time of closing the deal with some negotiation. So, by getting information about the average deal value, revenue can be predicted.
3. Average win rate: The number of leads that get converted into customers. Many leads have got a place in the sales funnel, but some of them do not get converted. So, to know the actual value of the average win rate, you need to check for qualified leads. The average win rate is equal to qualified leads per opportunity.
4. Conversion rate: It is equal to closed deals per total deals in the pipeline. Among so many opportunities, some get converted into leads. Conversion rate is a metric that keeps a pack of deals among various opportunities.
5. Sales cycle length: This refers to the time taken by the sales representatives to convert the leads from acquiring stage to the stage of closing the deal successfully. The sales cycle depends on factors like the complexity of your product, customizations it requires, and the source of leads. Sales cycles are generally shorter in SMBs and longer in B2B sales.
6. Pipeline value: It refers to the total value of all the deals in the pipeline. Through this metric, we can forecast the revenue of the organization and can help in making strategies by keeping in mind the pipeline value and the revenue forecast.

Difference Between Sales Pipeline and Sales Funnel

What is Sales Pipeline Management

Sales pipeline management is defined as the process of managing and tracking the leads at various stages in the sales pipeline. It is very essential to track the sales process to make strategies or change ways to overcome any shortcomings in the way of converting leads. This is an evolving process that requires your constant monitoring to ensure the efficiency of the sales pipeline.

Importance

Managing a sales pipeline is very essential and enables us to efficiently monitor and track the whole sales process and leads in the various stages of the sales pipeline.

Some of its advantages are mentioned below:

1. Improves the sales process.
2. Predict the financial health of the organization.
3. Analyze sales strategies.
4. Helps in decision-making based on pipeline reports.
5. Helps in reviewing performance as per the standards or forecast.
6. Allocating the right leads to the right sales representatives to ensure the best results.

Ways to Manage a Sales Pipeline

Here are the ways:

1. Conduct sales pipeline review meetings to analyze the pipeline and understand the status of deals, the effectiveness of the team, and the number of leads needed to reach the revenue target.
2. Use CRM software to efficiently track your deals and sales reps’ activities by providing deal insights, showing deal tasks in the pipeline, and showing the status of tasks i.e., complete, pending, or overdue.
3. Ensure visibility of the sales pipeline to different departments and encourage collaboration for better working. Since sales require different teams to do their part of the work, it is very essential to get them synced in the whole process.
4. Create sales pipeline reports with the help of CRM software that provides you with custom templates to easily and automatically fill the data. Reports help in tracking leads and making corrective measures if required.
5. Avoid manual tasks and use CRM. Also, it lets you save a lot of time and increases efficiency and productivity. It automates follow-ups, scheduling appointments, and so on. It automatically scores leads, automated emails and assigns leads to sales representatives by geography, deal value, and more.
6. Use customized multiple sales pipelines to manage multiple products targeting different markets. By creating different pipelines with different stages, the sales representatives get a clearer picture to achieve their target. CRM helps in creating customized stages in multiple sales pipelines.
7. Remember to follow up constantly with the leads by automating the sales email templates to be sent on a specific date or setting a reminder to follow up in case you forgot. Follow-up is getting harder day by day due to increasing competition and the availability of vast options to the prospects.
8. Keep your focus on working on the best leads. With the help of a sales dashboard, you can find which leads are more valuable and which are less. So accordingly, you can prioritize your efforts in converting leads that are going to get you more revenue.
9. Regularly monitor pipeline metrics like several deals in the pipeline, close-ratio, sales velocity, and more. It helps in tracking the health of the sales pipeline and enables you to effectively contribute to the growth of the organization.
10. Update the information regarding the leads at each stage of the sales pipeline regularly. This will enable you to be more sorted and organized and avoid confusion. The time spent on organizing and updating the leads is worth it.
11. Long sales cycles are the biggest barriers to sales effectiveness. Keep your sales cycle short. It can be done by shortening the days between follow-ups and making the leads decide their action in a short period by providing them with more information.
12. Create a standardized sales process to scale it with your growing business. The best sales-performing sales teams always follow a standardized sales process.

Mistakes to Avoid in Managing Sales Pipeline

• You should avoid letting the pipeline go dry. It means you should have enough leads in your pipeline that if certain leads do not get converted, then you should have others to work on.
• Avoid having a long sales cycle. It consumes the time of sales representatives and can cause the leads to lose their interest or the leads can find other products more attractive over the long period.
• Lack of coordination among teams of different departments must be avoided. In the course of lead, conversion leads are transferred from one team to another. Due to a lack of coordination, errors may occur.
• Not understanding customers’ needs can pose difficulties and clog the sales pipeline. Sometimes we assume that the information given by us to the leads is sufficient and mark the leads as interested, but in actuality, they are not. This causes disturbance in the sales process.
• Lack of deal insights can lead to distracted focus. By using a CRM, you can have AI-powered auto-generated deal insights like deal scoring and so on. Deal insights help in tracking various parameters and decision making would be easy.
• Focusing only on one stage at the expense of other stages is a big mistake that leads to a lead drop. For example, sometimes focusing on marketing and getting leads to websites is the major goal of organizations. After that, no proper support is provided to the leads.

List of Best Sales Pipeline Management Software

1. monday.com
2. Zendesk Sell
3. Pipedrive
4. Act! CRM
5. Keep
6. HubSpot
7. EngageBay
8. FreeAgent CRM
9. Bitrix24
10. Copper
11. Salesforce Sales Cloud
12. Zoho CRM
13. CloudTask

Recommended Reading =>>  Most Popular Sales Management Software

Frequently Asked Questions

Q #1) What is a sales pipeline template?

Answer: This is a visual model provided by various CRMs to kick start the sales process easily. By using these templates, you can manage leads more efficiently and easily without wasting your time in making one by just entering the details.

Q #2) How do you create a pipeline in Excel?

Answer: To create a sales pipeline in excel one needs to review sales stages and identify them with names. This is followed by creating a deal with basic sales data, along with the current stage at which the deal is. Going forward, one needs to update the stages and progress achieved. At this stage, it is necessary to enter the next activity date.

The most essential part of any pipeline is an information update on closing a deal. The final part of the sales pipeline is monitoring performance regularly to gain insights.

Q #3) What is the sales pipeline in CRM?

Answer: In CRM, a sales pipeline is defined as the tracking and managing of the leads at various stages in the sales process. It helps in tracking and following up on sales as they grow and evolve.

Q #4) What is the purpose of a sales pipeline?

Answer: The purpose is to provide a visual representation of the data of sales leads with the different stages of acquiring the leads to closing the deal. It provides insights like anticipated revenue and cash flow, sales cycle length, resource gaps, over allocations, and more.

Q #5) How can the sales pipeline be improved?

Answer: It can be improved in various ways, like- by conducting reviews and meetings, using CRM, encouraging collaboration, automation of tasks, focusing on the best leads, avoiding long sales cycles, keeping updating the pipeline, creating standardized sales processes, and so on.

Q #6) How do you analyze the sales pipeline?

Answer: This can be done by checking on the various insights and metrics that it provides, like- pipeline value, sales cycle length, conversion rate, average win rate, average deal value, anticipated revenue, and more.

Conclusion

From our research on sales pipelines, we now know the answers to what a sales pipeline is, what does pipeline mean in sales, what is sales pipeline management, how to build a sales pipeline, what are the stages and templates, and so on.

We got to know the importance of the sales pipeline as it helps in showing the status of leads, shows the value of success at each stage, forecasts sales, generates reports in financial metrics and increases productivity & revenue growth of the organizations.

There are various stages of the sales pipeline, all need to be well managed to ensure efficient working by the sales representatives.

Every organization needs a different set of sales pipeline stages, as they are different in nature and dealings. There are various things to remember while building a sales pipeline efficiently. Some of them are identifying the list of leads properly, following up diligently, checking sales metrics, using an easy-to-use CRM, and so on.

We condemn the sales pipeline as crucial to any organization that needs proper attention.